As some of the political machines of the mid 1800s coined the jocular phrase of “vote early and vote often”, I can’t help but think about all the spirited voters racing to their local polling establishments today and how the energy and equity markets have reacted to midterm elections of the recent past. Over the past 21 midterm elections, the party of the incumbent president has lost an average of 30 seats in the House and an average of four seats in the Senate, with only twice having gained in both houses. Below is a chart depicting the post-midterm election WTI crude oil price action of the past 4 midterm elections to the end of those respective calendar years:
Three out of the past four midterms had WTI crude oil rally anywhere from 4.88% - 17.61%, with one post midterm price action collapse of 26.32% in 2014. The S&P 500 range from down 3.74% to up 5.16% post midterm elections over the past four times.
Overall, it appears that whatever the outcome of recent midterm elections, the markets are just glad to move on and look towards the future. With WTI down almost 16% the past 23 days or so, for all the bulls licking their wounds, major news and uncertainties in their rear view mirrors is a welcome early holiday gift. OR, will the bears claws continue to thrash down on the energy sector until more data is produced in regard to the old fundamental staple of supply and demand for the balance of the year. Only time will tell. For now we await the next round of stats to show if the continued theme of builds on crude and draws on refined products continue the recent downward trend in price action in the energy sector. Vote is your Voice. Happy midterm elections.